Govt plans equal 5% stake offload by itself and partners in foreign ventures
Foreign firms showed mixed reactions to the decision, with some willing to offload a 5% stake while others were not
After two and a half months of announcing its plan to offload state-owned stakes in foreign ventures, the government held a joint meeting involving the Ministry of Industries, Bangladesh Chemical Industries Corporation (BCIC), and Investment Corporation of Bangladesh (ICB), marking the first — or ice-breaking — discussion with the firms.
Presided over by Industries Secretary Obaidur Rahman, the meeting informed multinational companies (MNCs) of the government's decision to offload at least 5% of its own shares and 5% of foreign partners' shares in all such ventures operating in the country.
Officials from around a dozen local and foreign firms attended the meeting, held at the industries ministry on 31 July.
The industries ministry and BCIC, on behalf of the government, hold substantial stakes in some multinational companies (MNCs) operating in the country, and the government has nominated directors to represent it on the boards of these companies.
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Sources present at the meeting told TBS that reactions to the proposal to offload 5% of foreign ownership shares in the capital market were mixed. Some companies were willing, while others expressed concerns.
Without naming names, sources said some cash-rich MNCs questioned the need to raise additional funds at this time and asked why they should list on the capital market. They noted that raising funds could increase the companies' liabilities.
"If funds are needed for future business expansion, they would consider going public or offloading shares. Meanwhile, some firms welcomed the government's decision and showed eagerness to raise funds by offloading shares," said an official, on condition of anonymity.
"This was the first meeting with the companies following the government's directive to bring them into the capital market. With regular follow-ups, we will arrange more meetings to achieve the government's objectives," the official said.
Mazeda Khatun, president of the Bangladesh Merchant Bankers Association and CEO of ICB Capital Management Limited, was present in the meeting.
She told TBS, "We all held discussions together to ensure depth in the capital market and public participation in multinational companies. The opinions of the companies were taken into account. They said initiatives would be taken to place the issue of share offloading on the agendas of their respective board meetings."
"Based on that," she continued, "another meeting was held on the afternoon of 31 July at the Financial Institutions Division, chaired by Chief Adviser's Special Assistant Anisuzzaman, and attended by the heads of ministries and regulatory bodies. It was decided that the companies would be followed up with to arrange board meetings promptly and reach a decision on the matter. Additionally, it was assured that any legal support needed by any company in this regard would also be provided."
Prior to this, the Bangladesh Securities and Exchange Commission (BSEC) met with Industries Adviser Adilur Rahman Khan to discuss necessary steps for the prompt listing of foreign or multinational companies with government ownership through direct entry into the capital market.
CA's instruction
In May, the interim government decided to bring profitable state-owned enterprises (SOEs) and multinational companies (MNCs) with government stakes to the stock market.
After a high-level meeting chaired by Chief Adviser Muhammad Yunus, CA's Press Secretary Shafiqul Alam said, "For example, the government holds shares in Unilever. Measures will be taken to offload those shares in the market."
Based on the issues discussed at the meeting, the chief adviser issued five key directives, including the aforementioned one, aimed at revitalising and modernising the market.
Govt owns substantial stakes in Synovia, Unilever, Novartis, and KAFCO
According to reports of BCIC, the corporation owns the highest 45.32% stake in Synovia Pharmaceuticals, formerly Sanofi Bangladesh.
In 2021, Beximco Pharmaceuticals, a concern of Beximco Group, acquired the majority stake of Sanofi Bangladesh, renamed Synovia Pharma PLC.
Sanofi Bangladesh started its operation in Bangladesh as part of the British chemical company May & Baker in 1958. Following a series of mergers and acquisitions (Fisons of the United Kingdom, Rhône-Poulenc of France and Hoechst Marion Roussel of Germany), it became known as Sanofi-Aventis in 2004, before being renamed in 2013 as Sanofi Bangladesh.
The government owns a 39.6% stake in Unilever Bangladesh, and currently, two directors are nominated to the board of Unilever Bangladesh by the Ministry of Industries.
Karnaphuli Fertiliser Company (Kafco) is a 100% export-oriented international joint venture company. Established in Bangladesh with the shareholding and support of the governments and private sectors of Bangladesh, Japan, Denmark and the Netherlands, Kafco is the largest joint venture investment in Bangladesh, according to its website.
The Kafco produces high-grade granular Urea and anhydrous Ammonia.
The BCIC reports showed that the industries ministry owns 43.15% stake in the company, while BCIC owns 0.37% stake.
On the board of Kafco, four directors represent the government of Bangladesh, including the chairman.
The BCIC owns 40% stake in Novartis Bangladesh, 40% stake in Bayer CorpScience BD, and 40% stake in Syngenta Bangladesh.
While the industries ministry owns a 12.92% stake in Nuvista Pharmaceuticals.
Meeting with a dozen firms
In a press release, ICB announced an initiative by ICB Capital Management Limited to list government-owned companies on the capital market, as part of implementing the Chief Adviser's directives to review, develop, and strengthen the overall capital market.
Officials from MoI, ICB and representatives from the companies, including MDs/CEOs/appropriate delegates, attended the meeting.
ICB's press release stated that the following companies were present at the meeting: Unilever Bangladesh, Nuvista Pharma, Sanofi Bangladesh, IPDC Finance, Reckitt Benckiser (Bangladesh), Bengal Glass Works, Mirpur Ceramic Works, Himadri Ltd, and Karnaphuli Fertiliser Company.
In the meeting, Niranjan Chandra Debnath, managing director of ICB, Majeda Khatun, CEO of ICB Capital Management (a subsidiary of ICB), Md Fazlur Rahman, chairman of BCIC and the Director General of BSRB, and ASM Shafiul Alam Talukder, director general of Bangladesh Ship Recycling Board, were present.
